Plastic neophyte questions logic of getting credit

Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com, and also wrote for MSN Money, Interest.com and Bankrate.com, and has guested on Martha Stewart Radio and other programs.

Dear To Her Credit,
I'm 25, recently graduated from college, and working as an elementary school teacher. My mom suggested that I get a credit card to start building a good credit history. I don't have anything on my credit history so far except a car loan, which I paid off early.

I was about to sign up for a card, but then I heard a financial expert say that credit cards are bad because so many people get into trouble with them. He also said people spend way more money when they're paying by credit card, so you should always pay with cash or a debit card.

Who is right, my mom or the financial expert? -- Kyra

Dear Kyra,
Mom is always right, of course.

Seriously, the financial expert who tells people never to use credit cards has good reasons for giving that advice. A lot of Americans aren't doing so well with credit cards. I regularly get letters from people in deep distress because they're so far in credit card debt that they don't know how to get out. Some of the stories are so sad that I almost agree with him.

However, saying no one should have credit cards because some people get into trouble with them is like saying some people are terrible drivers, so we should all stay off the road. Some people (a few I've driven behind recently) should stay off the road! More people should just stop texting, eating sandwiches and turning around to talk to the gigantic dog in the back seat and concentrate on their driving, and they'll be fine. In fact, we'd all do well to be reminded of good driving habits from time to time.

The same goes for credit cards. Some people won't or can't ever learn to manage them successfully. These are the people we hear about the most.

However, the large majority of consumers are perfectly capable of using cards responsibly -- if they learn how. According to the Federal Reserve Board's 2007 Survey of Consumer Finances, about three in four American families have at least one credit card. Of them, only 60 percent had a balance when they were interviewed. That means the other 40 percent of Americans with credit cards had no balance at all. When you also include families that have no credit cards, a full 54 percent of Americans live in families free of credit card debt. That flies against the conventional wisdom that we're all awash in credit card debt.

And then there's you. You've finished college, gotten a responsible job and paid off your car -- all by the age of 25. You put off getting that first credit card while many of your friends were signing up to get the free pizza and T-shirts. And your own mother, who knows you better than anyone, is suggesting that you get a credit card. Those are all good signs!

I'd encourage you to have at least one credit card. A card does more than help you build credit history. It's convenient, of course. It helps you track spending, and it might give you rewards, such as free airline tickets. In addition, the credit limit can be part of your emergency fund. Yes, you should keep enough cash on hand to pay for emegencies. But what if the car breaks down twice -- in Timbuktu? As long as you know the difference between an emergency and a splurge, there's nothing wrong with a credit limit of a few thousand dollars as a backup plan.

You can get along without a credit card if you want (27 percent of Americans families do), or you can get one or two cards and keep them paid off every month. Either way, as long as you continue to be as financially responsible as you have been so far, I think you'll be fine.

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